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Novartis will lay out $88M to unify Fougera's U.S. manufacturing

Novartis' ($NVS) Fougera Pharmaceuticals currently has its manufacturing split between two plants that are located only about 15 minutes apart but in two different Long Island, NY, communities. The dermatology specialist thinks it is time to unite the two and so will expand and upgrade one of the sites over the next 4 years and then relocate its nearly 400 workers there.

Fougera is a unit of Novartis' Sandoz. The generic manufacturing operation of the Swiss drugmaker said Monday that it is investing about $88 million to consolidate production sites in Melville and Hicksville, NY, into the Melville location, anticipating that the project will be wrapped up in 2020. It said the Melville site is being revamped into a "highly compliant and cost-effective manufacturing and R&D facility" with expanded capacity to handle future product launches.

Spokesperson Leslie Pott said the consolidation is not expected to affect headcount and that Sandoz anticipates having Fougera's 388 employees in the expanded Melville location by 2020. That includes employees working in technical operations, quality operations, R&D, support and administrative functions.

Sandoz President Peter Goldschmidt

"Sandoz is a leading U.S. generic company with a strong focus on dermatology," Peter Goldschmidt, president of Sandoz US, said in a statement. "We plan to continue to invest in this therapeutic area to strengthen and grow our dermatology portfolio while increasing patient access to high-quality, cost-saving treatment options."

Novartis snapped up Fougera Pharmaceuticals in 2012 for $1.5 billion. The buyout made Sandoz the dominant player in dermatology knockoffs, an area of drugmaking that has attracted a lot of attention in recent years. In the same year, India's Sun Pharmaceutical bought control of Hawthorne, NY-based Taro Pharmaceutical Industries, while Allegan, MI-based Perrigo ($PRGO) bought out Chicago-based Cobrek Pharmaceuticals to boost its ointments and creams offerings. Fougera, Taro and Perrigo lead the pack in generic skin treatments in the U.S.

Fougera's new facility will be built as Novartis is working to streamline its manufacturing operations by consolidating all of it into one unit. But it also comes as Sandoz is in the process of closing a couple of plants in Europe and one in India, as it looks to cut its manufacturing overhead.